Nuclear industry in limbo after disasters

Between the fallout from the Fukushima disaster and the glut of natural gas hitting markets, the future of the nuclear industry in North America is in limbo.

Boosters used to talk of a resurgence in the market for nuclear energy as concerns about reliance on fossil fuels and the harmful effects of greenhouse gases mounted, but recent events have put a decided damper on that enthusiasm.

“Just looking at the economics, the renaissance is definitely on hold,” says Bryne Purchase, former Ontario deputy minister of energy and adjunct professor at the School of Policy Studies at Queen’s University in Kingston, Ont.

With economic growth in Canada and the United States sluggish at best, he says, there is little demand for significant amounts of new power, particularly from heavy users in the industrial sector.

At the same time, the price of the technology, including next-generation reactors, is “high and rising,” Prof. Purchase says. “I would say economic growth is the No. 1 concern and the second concern is cost.”

The sudden abundance of cheap natural gas from shale deposits in North America has also raised the prospect of using combined-cycle gas turbines for base-load electricity needs, he says.

The picture is different in emerging markets, in which annual growth remains well above the 2% to 3% rates seen in North America. “Where there is money and where there’s a huge growing demand for energy, nuclear is alive and well,” Prof. Purchase says.

Following the March 11, 2011 Japanese earthquake and tsunami and resulting nuclear meltdowns, Germany announced plans to shutter its oldest reactors and make a complete exit from the industry by 2022. Other countries made similar declarations amid a global review of the industry.

But David Talbot, vice-president and senior mining analyst at Dundee Capital Markets, says the worldwide outlook for the sector is still strong, particularly when gauged by demand for uranium.

“Really it’s Russia, China and India that account for about half of the new builds,” he says. “All of those countries have been sort of reaffirming their support. For the most part we considered maybe a 5% to 10% pullback in long-term uranium demand based on Fukushima.”

He says the lost demand from Germany, which uses about nine million pounds of uranium a year, will account for only about 3% of world demand by 2020, when Dundee projects worldwide demand will be at least 240 million pounds, up from about 180 million pounds this year.

“It’s a little bit of a hit, but it’s not the be-all-end-all,” he says.

But new-reactor construction in North America is unlikely to be significant to the nuclear sector, Mr. Talbot says.

The United States has 104 nuclear reactors while Canada has 18, almost all in Ontario with one each in Quebec and New Brunswick. Nuclear energy accounts for about 15% of Canada’s electricity generation and about 20% in the U.S.

With only a handful of new reactors planned or proposed in Canada and about 35 in the United States, according to the World Nuclear Association, the North American numbers pale in comparison to China’s approximately 170 planned or proposed reactors and about 25 under construction now.

Although growth in new reactors is not coming from Canada, a large chunk of the world’s uranium still is, with the majority coming from massive deposits in Saskatchewan.

The World Nuclear Association says Canada, which produces about 22% of world supply, is the second-largest producer, after Kazakhstan surpassed it in 2009.

“Fukushima definitely has influenced the way the public feels about nuclear power, because it was such a dramatic sort of thing,” says Warren Mabee, director of the Queen’s University Institute for Energy and Environmental Policy.

“I do think public acceptance right now is probably at a low and the appetite for the government to take on the debt and the risk associated with building a new plant, I think that’s low, too,” Mr. Mabee says.